The Amerigroup Corporation, a Virginia Beach, Va.-based health insurer, will pay $225 million to settle fraud allegations against the Illinois Medicaid program.
Amerigroup and its Illinois subsidiary were accused of trying to avoid enrolling pregnant women and unhealthy patients in its Illinois managed care program.
The United States and the state of Illinois paid Amerigroup to operate a Medicaid managed care plan to provide healthcare to low-income people in the state. Under law Amerigroup was required to enroll all eligible beneficiaries.
The United States and Illinois brought claims against the company for violating this requirement by excluding patients who were more costly to treat and would have eroded the company's profit margin.
A jury found Amerigroup liable under the federal False Claims Act and the Illinois Whistleblower Reward and Protection Act in October 2006.
A $334 million judgment against Amerigroup was entered by the court. Amerigroup filed an appeal with the U.S. Court of Appeals for the Seventh Circuit in Chicago.
As part of the settlement, Amerigroup will dismiss this appeal and has agreed to enter into a Corporate Integrity Agreement, or CIA, with the Office of Inspector General for the U.S. Department of Health and Human Services.
"A settlement of this magnitude sends the clear message that this office takes healthcare fraud very seriously," said Patrick J. Fitzgerald, U.S. attorney for the Northern District of llinois. "This case also illustrates the perils a defendant faces in taking a case such as this to trial."
The CIA between Amerigroup and its subsidiary health plans and the Office of Inspector General requires the company to adopt policies and procedures and a code of conduct designed to prevent improper discrimination against federal healthcare program beneficiaries in its marketing and enrollment practices.
In addition, Amerigroup must hire an independent organization to annually review its marketing practices and enrollment initiatives, and its board of directors must certify the effectiveness of its compliance program each year.
"The Office of Inspector General is committed to protecting Medicaid beneficiaries from fraud and discrimination," said HHS Inspector General Daniel R. Levinson. "This Corporate Integrity Agreement will help ensure that our most vulnerable beneficiaries have access to needed Medicaid HMO plans in the future."
The lawsuit against Amerigroup was originally filed by Cleveland Tyson, a former company employee. Tyson will receive a $56.25 million share of the settlement.